Analysis: How to make friends and influence marketers

Let's face it, marketing and procurement don't always make excellent bedfellows and economic conditions over the past few years have brought this into focus.

When WPP-owned Ogilvy & Mather attributed recent job cuts to the increasing role of client procurement departments it highlighted not only the perceived strain that's being put on the relationship, but also the influence procurement often has on marketing.

But those who might see the increased involvement of procurement in the way companies buy marketing services as simply a by-product of lean financial times are likely to be in for a shock.

There's no obvious sign that the two will part ways any time soon and addressing the problem seems smarter than hoping it will go away. Still, even those who are facing up to the challenge of making the relationship mutually beneficial admit that it's difficult to get it right to the extent where tangible rewards are realised.

Ciara Dilley, marketing director of Premier Foods in Ireland says: "We are getting better at it and it's been a big focus for us. But it's not easy. Effective procurement is very much a skill itself and marketing is one of the most difficult areas to apply that to."

Tricky indeed, but understanding the value of pulling the two functions closer together is a crucial first step in any strategy.

Heinz's chief commercial officer and European VP of purchasing, John Hans, has a clear idea of how the relationship works best at his company. "They control most of their indirect spend and they own that function. Theirs is a key strategic spend, if they don't have ownership it won't work."

While Hans points out that procurement is involved with marketing at a high level - notably in a drive to consolidate suppliers and at various stages of the negotiation process - it's clear where the power lies. "For our culture, it's the right approach," he says.

The world's largest consumer products company, Procter & Gamble is an example of a huge advertiser pulling out the stops to make sure marketing and spend management are aligned. When they won the Procurement Leaders Excellence Award back in May, it was commended for being able to show improved return on marketing and advertising investment.

Dilley notes that this is a valuable measure of success: "We look at value a lot and we will often get initial quotes and benchmark against where those eventually end up. It's also important to be able to compare our activity to similar projects from previous years so we can measure the success of what we're doing."

Paul Broeren, owner of marketing and media procurement company Quadrivium estimates that, "the cost of not getting this right can be 20% inefficiency. The changes that can be made can come at only 5/10% the cost of the efficiency gain. This is completely different from, say, procurement in a factory where there often needs to be huge investment to begin to see savings."

According to Rosie Doggett, co-director at marketing procurement consultancy RD Squared, "Procurement people that get it right are the ones that have gone to marketers and said 'I'm here to save you money that you can then start to reinvest into your marketing budgets to make them go further'".

It sounds simple, though for many this is a hugely challenging and even vaguely unnecessary task. For those whose job it is to balance these demands, it seems essential. 
Finding the right talent to bridge the gap is one of the most consistent challenges in the exercise. "Good marketing procurement people are very rare - there's only a handful of truly strong ones with the mix of personality and background," says Doggett. "And of course it can be extremely damaging to any trust between departments to send in inexperienced people, so companies often have a problem on their hands."

That's not to say there aren't widely experienced procurement managers that are able to turn their hand to marketing procurement.

However, Dilley explains: "It's very difficult to get good people, there's just not many who have marketing and procurement experience. We find sometimes it's best not to look in the obvious places."

"It helps to train marketers to be more procurement savvy, it makes them more responsible and empowers them to understand negotiations. This is something we actively undertake and we can work with external providers to make this happen." 

Brad Dehart, a practice leader for marketing-services procurement at IGC Commerce, writing on www.adage.com, provides insight from the marketing side. "If you're a CMO or marketing leader, make sure you know the procurement professionals who work at or with your company," he says. "Do your very best to ensure you have procurers with marketing experience. If you don't have access to these resources now, talk to leadership and let them know you want to work on ways to develop the capability internally or look to an outside provider."

Clearly, marketing experience is at a premium and marketing procurement managers who don't have it face a struggle to make progress. 

Broeren says: "It's different for procurement, if they don't have the background they are unlikely to make a good counterpart. They need to be aware that there has to be a discussion on content and not just on contracts."

Those that have been successful have been able to have a relationship with marketing that has minimised the imbalance of volume versus value.  Looking at successful operations, proactive measures seem crucial to ensuring that both sides are able to agree on common objectives rather than pulling in different directions.

At Procter & Gamble, for example, head of global purchases Rick Hughes and the chief marketing officer work closely together and have weekly meetings. They have had success at engaging agencies in the process of implementing new systems to manage value.

Such an idyllic portrayal of two functions working side-by-side is unlikely to be achievable, at least in the short term, for many organisations. However, there are several common strategies that have helped improve procurements' involvement in the marketing process. 

Dilley highlights the importance of "having shared objectives up front. The two teams need to be clear and open about what they're trying to achieve. For example, if we're looking at running a TV advert, procurement can lay out how they might go about looking for the best cost and marketing can do the same for best quality. Mutual goals can be reached."

Broeren agrees, "Regardless of the industry, I think the most important things are the clarity of process and having understandable KPIs."

Premier Foods has found value in presenting one front when facing an agency. "Marketing needs to be sure it doesn't always make procurement the 'bad cop' in the negotiations, both with agencies and internally", says Dilley. "What is always important to look for is mutual respect. For example, one of the biggest complaints from marketing in general is when procurement starts to get involved on the creative side. It's not black and white but there needs to be a real regard for each other's roles."

For those that see marketing as a commodity, this won't hold much weight. Still, the perception of procurement is damaged every time these two functions clash and there is no apparent upside to that situation. As Doggett points out, "one cannot be effective without getting the buy in of marketers. You simply can't go round them."

Those companies that have decided what they want to get out of managing the spend of their marketing department should be the same ones that have a robust strategy in place to do so. If big names are starting to do it well, it's only a matter of time before those that don't get left behind.

Procurement Tag - Marketing Services Procurement